Tax Aggrandisement
A current hot topic amongst VAT Consultants is whether HM Customs & Excise
are operating a policy of Tax Aggrandisement. The antithesis of Tax Avoidance, Customs
appear to be raising assessments and refusing claims on the flimsiest of precepts
regardless of whether they believe it can be supported or whether it sets a precedent
that could be used against them.
These decisions are then apparently supported by appeals and review teams who uphold
decisions apparently without considering pertinent points.
This would appear to be Customs answer to the shortfall in revenues caused by
the rapid increase in fraud and abuse of the system but once again it is the innocent
taxpayer that is hit the hardest.
Vending and Amusement Machines
VATease reported on the Sinclair Collis ruling in June
this year. This month HM Customs & Excise have published policy following the decision.
Businesses who allow operators of coin-operated machines to use space in their
premises must charge VAT on the income received for this supply. Customs are delaying
application of this change until 1 January 2004, although businesses can choose to
charge VAT from a current date.
Businesses should check the contracts set up for these supplies. Unless the payment
received is specifically defined as VAT exclusive, it should be treated as VAT inclusive
and businesses will suddenly find themselves receiving just 40/47 of what they had
previously.
Rumours have been circulating that there is about to be a change to the
50% restriction on VAT on leased cars. The European Court case to which these rumours
refer has not yet been decided, and when it is, it is likely that it will not immediately
apply to the UK. There is a long way to go before Customs will entertain any additional
claims for input VAT.
Tax points for ongoing supplies
Changes announced in the budget have come into force this month. Associated
companies who make continues supplies of services (including leases of property and
supplies of heat and power) will now be forced to account for VAT at least once every
12 months.
This is of particular importance to companies who note such cross charges in their
accounts but never invoice them or declare VAT. These charges could go unnoticed
for years before being picked up on a VAT visit.
Accountancy practices should make note of such supplies during preparation of
the accounts and ensure VAT is charged.
Simplified Import VAT Accounting (SIVA)
Anti Money Laundering
Customs have updated and revised both Notice MSB1 (Money Service Businesses:
Registration), and Notice MSB2 (Anti money laundering guide). This updates guidance
on current law but they note that new legislation is due to be introduced later
in 2003 and a new Notice will be issued next year.
National Helpline
We have heard reports of some operators on Customs' National Advice Service
(0845 010 9000) refusing to speak to accountants regarding their clients, even where
confidential information is not being requested, unless they have a copy of an authorisation
letter from the client on their electronic folder.
If you require further information please contact us on 0121 778 4299.
This newsletter is designed to keep readers abreast of current developments. No
liability is accepted for errors, omissions or opinions it contains or for any
reliance placed on this newsletter.
